Update 4/22/19: Bonus is available until June 30th, 2019. As I’m slowly starting to change my mind on brokerage bonuses I thought this one was worth revisiting. The main difference between this and other brokerage bonuses is that you must let Betterment manage your funds. Because of this I don’t think this bonus is worth considering.

Extended until November 1st. American Airlines have also been aggressively pushing this out to loyalty members via e-mail so I thought it was worth reposting. Hat tip to all the readers that sent this in.

The Offer

Investment site Betterment is offering up to 30,000 American Airline miles when you invest with them. Bonus will depend on how much you deposit within the first 45 days, broken down as follows:

$15,000-$49,999: 5,000 AAdvantage® miles

$50,000-$99,999: 15,000 AAdvantage® miles

$100,000+: 30,000 AAdvantage® miles

You also must maintain these deposits for 60 days from the qualification date in order to receive the bonus miles

The Fine Print

This offer is valid only for new customers who open a taxable Betterment account by 04/18/18 and fund such new account with $15,000 or more of qualifying net deposits within 45 days of account opening.

Qualifying net deposits are calculated as assets deposited into a customer’s taxable Betterment account minus assets withdrawn from such account and transferred out of Betterment. Qualifying net deposits will be calculated as of the 45th day after account opening (the “Qualification Date”). Only outside assets new to Betterment qualify for purposes of calculating qualifying net deposits.

The offer does not apply to deposits or rollovers into any trust account, tax-advantaged retirement account, traditional IRA, Roth IRA, SEP IRA or other IRA account, or 401(k) account. Employer-sponsored retirement accounts provided through Betterment for Business and accounts advised through the Betterment For Advisors platform or the Betterment Advisor Network are excluded from the offer, and deposits into such accounts are not counted towards the deposit thresholds set forth in this offer.

Qualifying net deposits must be maintained in a customer’s account for a minimum of 60 days from the Qualification Date (the “Holding Period”) in order to receive an award of AAdvantage® miles. Customers who meet the criteria set out in these terms shall receive AAdvantage® miles as follows: (i) qualifying net deposits of $15,000 – $49,999 will receive 5,000 AAdvantage® miles; (ii) qualifying net deposits of $50,000 – $99,999 will receive 15,000 AAdvantage® miles; and (iii) qualifying net deposits of $100,000 or more will receive 30,000 AAdvantage® miles. Customers wishing to receive AAdvantage® miles must establish an AAdvantage® account directly with American Airlines.

The customer opening a new Betterment account must be the same individual receiving any AAdvantage® miles earned in connection with this offer. Customers must provide a valid AAdvantage® account number to Betterment within 105 days of account opening pursuant to the instructions provided.

Allow 3-4 weeks from the expiration of the Holding Period for AAdvantage® miles to appear in your AAdvantage® account.

Betterment reserves the right to restrict or revoke this offer at any time. This is not an offer in any jurisdiction where we are not authorized to do business. A customer’s AAdvantage® account must be in good standing (as determined by American Airlines) to receive AAdvantage® miles. All AAdvantage® program rules apply to AAdvantage® program membership, AAdvantage® miles, offers, AAdvantage® mile accrual, AAdvantage® mile redemption and travel benefits.

Open to U.S. residents only, and the offer is limited to one per individual.

Our Verdict

If you wanted to churn and burn the account your best option would be the $100,000 deposit for 30,000 miles. Ideally you’d deposit the funds on day 44 and then maintain it for a further 60 days (total of 61/62 days with the funds invested) before withdrawing. Let’s be conservative and say it’s 90 days and also say your current investments you pay 0% in fees (compared to 0.25% with betterment), in total you’d pay ~$62 in fees. That’s a pretty good deal for 30,000 American Airline miles, but it also assumes everything goes well and betterment performs as well as your other investments.

Personally I like my investments to be set and forget with as low fees as possible. The miles are nice, but long term I find these deals to be too much trouble with something usually not going perfectly so I opt to pass on them. That being said this might be a good deal for some people, especially anybody wanting to invest with Betterment long term (again I think there are better lower fee alternatives but do your own research).

If you are just starting out, just get a low cost, broad based stock index fund or target date fund. The classic example is VTSAX at Vanguard. Fund expenses are 0.04% per year – Betterment fees alone are 6x as much, and I believe that you still pay fund expenses as well. Alternately, use a broker like Merrill Edge where you can get cheap or free trades and buy VTI for almost exactly the same investment. Fidelity and Schwab have their own low cost index funds.

+2 Credit card rewards should not be the motivation for picking a brokerage. It’s letting the tail wag the dog. Choose the brokersge with the lowest cost index funds and the lowest cost to trade. Don’t be influenced by this kind of trivial offer.

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March 12, 2018 8:41 pm

anthonyjh21

#632685

And depending on whether you’re in the earning or burning phase as well as risk tolerance you’ll probably want to throw some bonds in there. Easy answer is the Vanguard BND total stock market.

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August 23, 2018 12:13 am

Lrdx

#569113

For people who want (robo) management, Betterment is a good choice. Wealthfront and Schwab Intelligent Portfolios are good too. Rest of the robos are too expensive and/or bad, and human management is excessively expensive.

People who don’t need/want management are probably better off opening an account at Vanguard / Schwab / etc. and buy dirt cheap index funds/ETFs like VTSAX. There is debate if the automatic tax loss harvesting can offset the management fees. You can also try to do your own TLH, if you care. (It’s not hard TBH, you just need to know what you are doing.)

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March 12, 2018 3:40 pm

Nate

#569134

Lets be clear at least that there’s no benefit to tax-loss harvesting in a tax-advantaged retirement account.

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March 12, 2018 4:34 pm

Lrdx

#569212

Sure.. A Vanguard / Schwab Target Date Fund should be good enough for most people investing in an IRA or 401k (if they are available).

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March 12, 2018 6:34 pm

sloebrake

#569316

If you want to get the into the weeds look up ‘robo report’ by backend benchmarking/Condor Capital.

They do a nice job of comparing them all.

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March 12, 2018 9:15 pm

Snorlax

#752995

“Three fund portfolio” with low cost index funds. Fidelity, Schwab, and Vanguard are all good choices to set this up.

This promotion is not valid with any other offers and is non-transferable

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March 12, 2018 12:53 pm

Shea Travels

#569079

The miles earned under this promo would be taxable, no? Just a little too much hassle to make this worth it imo, especially with the other easier avenues to get AA miles (i.e. citi mailers). Between promos like this and citi giving away AA miles like candy, I’m more and more concerned of a large AA devaluation in the near future.

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March 12, 2018 2:24 pm

BW

#569123

No mention in the terms & conditions of them being taxable or 1099 issued.

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March 12, 2018 4:06 pm

anne

#569125

I don’t see how “citi giving away AA miles like candy”. Can you explain please? I am about to cancel both personal and business AAdvantage card, so I am not eligible April 2020 at least. I have never got AA mailer offer either. I need to replenish my AA mileage account since it is only enough for one economy ticket to Asia now.

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March 12, 2018 4:14 pm

BW

#569143

Did you open Barclay AA aviator cards yet? The personal is 50k and the business is 40k, that’s 90k miles for two $95 fees. I just opened the biz version, I’d rather pay $95 for 40k miles then deal with moving around $100k to Betterment for 30k.

Doc, this blog has morphed into something akin to a general personal finance site, so i think it might actually be nice if you’d venture a bit into the world of investing and brokerage accounts- maybe some overviews on investing basics, different brokerage account options (and bonuses!), various fee structures and return differentials.

You’re already in the world of money and its time value, so why not take this all the way? Investments matter at least as much as bank account bonuses, credit card churning (maybe not for true die-hards, but for the casual readers of your site), and random deals and coupons. Also, there’s nice potential revenue for this site in that area.

Looking forward to see your take!

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August 22, 2018 11:17 pm

Ben

#632670

I opened an account a few months ago, and miles posted as expected. FWIW I think the product is good if it’s what you’re looking for. My account is up about $1,000 (not saying this is good or bad; it’s simply a function of market returns since I opened it), but interestingly Betterment has “harvested” $1,900 in tax losses. I’ve never had tax loss harvesting before, so I’m very interested to see exactly what impact this has when I file next year.

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August 22, 2018 11:21 pm

Lrdx

#632679

You can offset gains and if any remained, offset regular income up to $3000 / year, roll over remaining losses to next year.

You were “lucky” to start investing shortly before a market drop. After a long rally, TLH can’t really do anything.

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August 23, 2018 12:02 am

Andrew

#632897

Make sure you don’t get caught up by wash sales. If Betterment auto-executes a TLH buying/selling shares of a similar security that you may hold in another account (ie, 401k), you may get tripped up by this.

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August 23, 2018 11:45 am

Andrew

#632895

I used to be a Betterment customer back when their fees were only 0.15% for a 100K+ balance. I moved my account when they raised them to 0.25% without any warning. Things you should know:

1) You can’t transfer existing securities into a Betterment account. They only take cash deposits. For example, if you already own a bunch of VTI at another brokerage, you can’t transfer any of it into Betterment without liquidating it to cash first, thus triggering a taxable event.

2) Betterment buys everything in fractional shares. If and when you decide to close your account and move to another brokerage, they’ll only be able to transfer whole shares. Whatever’s left over must be liquidated (taxable). For example, if you have 22.406 shares of VTI in your Betterment account, they’ll transfer 22 shares but leave the remaining 0.406. You must sell/liquidate the 0.406 to close the account, once again triggering a taxable event.

3) IRA or Roth IRA accounts are exceptions. If you have an existing IRA or Roth IRA elsewhere, you can liquidate it to cash (which isn’t taxable because iRA) before depositing it into Betterment. The same is true if and when you decide to move the IRA out of Betterment – they will liquidate it and cut a check to your new brokerage. There’s no tax penalty for this if you do it quickly enough.

TL;DR: This deal isn’t worth it if you’re considering doing it with a taxable account. The tax penalties will likely be greater than any benefit you get from the points.

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August 23, 2018 11:40 am

olga

#632973

you left one use case: when doing manual tax loss harvesting, you can as well move that cash to betterment for 90 days. Just make sure to avoid wash sale.

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